By Akeem Oyetunde
Appraising the performance of the Nigerian investment space the past two years that Ms. Mary Uduk held sway as Acting Director General of the Securities and Exchange Commission, SEC, reflects a sector that has continued to respond proactively to emerging global trends following innovative strategies being adopted by those saddled with the responsibility of guiding the investment market towards desirable direction for sustainable growth.
As it were, the Nigerian Stock Exchange (NSE) serves as the hub for formal transactions in equities and other instruments like its counterparts in other climes. Beyond the official listing and trading of stocks and other securities in the bourse, however, lies the more fundamental ‘regulatory radar’ being provided by the Securities and Exchange Commission (SEC).
A cursory assessment of the commission’s transformational strides in the past two years has reflected remarkable innovations and the attendant positive developments, especially when understood against the backdrop of the pervasive effects of the economic sluggishness on capital markets on emerging economies across geo-political zones globally in the past few years.
But then, like a clairvoyant Amazon endowed with requisite professional skills and cognate experience in investment management, Ms. Uduk came with a mission of fulfilling the SEC’s statutory mandate through team work, collaborative engagements of stakeholders and a deep sense of purpose.
Looking at the performance of the SEC in the past two years on critical rating parameters showed that the management has done reasonably well in terms of sustaining investors’ confidence in the capital market; instilling discipline in transactional processes in the bourse; and enlightenment and engagement of investors and their associations on emerging trends in global investment space.
Similarly, the SEC intensified sundry initiatives to protect of the public from fraudulent or scam investment promoters, improve the contributions of the capital market to nation’s economy; investment in human capital training and development; promotion of innovative technology and solutions in the SEC and capital market operations; and sustained the implementation of the 10-Year Capital Market Master Plan (CMMP) with remarkable achievements recorded so far, amongst others.
As part of the initiatives of the Capital Market Master Plan, a committee was set up with the objective of enhancing capital formation and investment through a National Saving Scheme. Against the background knowledge that savings is necessary for investment and growth, the Commission, through this committee, has facilitated the development of a concept paper seeking to establish policies that will drive national savings with a clear structure for mobilizing domestic savings. The report of the committee has been reviewed and submitted to the Minister of Finance, Budget and National Planning and plans are now in top gear to inaugurate a National Working Group on National Savings Strategy.
With the advent of COVID:19, the Regulator went ahead to release about three circulars concerning the action against the COVID-19. One of them was to direct the entire Capital Market Operators to provide report on their Business Continuity Plan and processes (BCP), for public companies to make sure that they continue to send out information to investors and also to give out information on how COVID– 19 would affect them if possible make forecast and outlook to let investors know how the pandemic can affect their operation volatility and others.
The SEC on its part has put up email addresses that people can use to send returns, applications, which are all on its websites so that the Capital Market can continue to work even during the pandemic.
Complementarily, the Commission has equally ensured that companies’ annual reports are distributed electronically thereby aiding timeliness of information to shareholders and cost reduction to public companies.
In a bid to address challenges associated with identity management in the capital market, the Commission has recently developed a standardised Investor’s Data and Consent Form to be adopted by all Capital Market Operators which has been exposed on the Commission’s website.
Identity management has been a problem not just in the Capital market in Nigeria, but in many sectors of the economy.
For instance, on the issue of sustaining investors’ confidence in the Nigerian capital market, the Uduk-led leadership of the SEC continued to promote the E-Dividend Mandate Management System, the Direct Cash Settlement and the Multiple Subscription service option for investors. In addition, the SEC has raised the bar of investors’ confidence through the National Investors Protection Fund (NIPF) Risk-Based supervision and the Complaints Management Framework that opens communication channels for investors to lodge complaints and get prompt responses.
The importance of the E-Dividend Mandate Management System is to eradicate or reduce to the barest minimum the incidence of unclaimed dividend. To boost the e-dividend mandate and Direct Cash Settlement initiatives, the commission has engaged the Nigeria Inter-Bank Settlement System (NIBSS) on behalf of the capital market community to facilitate identity validation and account validation in an effort to enhance market processes.
Recently, in furtherance of its investor protection mandate, the commission, in line with the provisions of Section 13 (w) of ISA 2007 which empowers the commission to close any illegal investment companies, sealed off the premises of various illegal fund managers while also pasting a list of 12 of such illegal; entities for the information of the general public.
The 12 unlawful/unlicensed investment schemes are: Loom Nigeria Money, Box Value Trading Company Ltd, Now-Now Alert, Flip Cash Investment, Result Investment Nigeria Limited, Helping Hand and Investment and No Failure Development and Empowerment Nig. Ltd
Others are MBA Forex and Investment Ltd, Federate Investors Trading Company, Jamalife Helpers Global Ltd, Flexus Global Solutions and Investment Ltd, United Capital Investment Company Limited.
Also, the Nigerian capital market has also grown over time. For instance, exchanges such as FMDQ, NASD, AFEX and the Lagos Commodities and Futures Exchange (LCFE) have been established in the last 5 years and many of them are listing and trading new and innovative products.
Complementarily, the commission had recently also approved the amendments to its regulatory framework which prohibited stockbrokers from engaging in any form of guaranteed investments on behalf of shareholders.
The amended regulation also requires stockbrokers to categorically inform their clients, in writing, that they cannot engage in guaranteed investments on their behalf. Prior to the commission’s directive, there had been a significant increase in the abuse of guaranteed investments which, unfortunately, resulted in losses.
These regulatory measures, as some analysts have commented, are desirable to the current drives by Ms. Uduk and her team to make transactions in the capital market totally transparent for investments in line with global best practices.
On the way forward for the capital market, it is strongly recommended that all stakeholders in the investment space, including the fiscal and monetary authorities as well as the National Assembly, extends hands of support to the SEC management in the task of attracting long term investments into Nigeria and by so doing, close the funding gap that has remained the bane of the country’s sustainable development over the years.